IEA says EV sales trend opposes potential battery shortages
As solutions like renewable energy, fossil fuel elimination and emissions reduction initiatives become commonplace in today’s sustainability agenda, not many industries are as volatile as the electric vehicle (EV) sector.
As a collective, companies in the industry have achieved great things, including bringing EVs to the public at scale and making them more powerful, intuitive and efficient than ever. In 2021, EVs made up 10% of the global automotive sales and, in quarter 1 2022, reached 2 million—a 75% increase from the previous year.
As a result, global EV sales are on the rise, but while this is still very much a transformation, as well as a technology and supply chain affair, the high demand for EVs is altering the landscape in other areas. While battery manufacturing is ramping up, it’s perhaps not fast enough for the industry to keep up with the incline in EV sales.
Delayed EV deliveries’ knock-on effect on sales
Automotive manufacturers have seen exponential growth as the world arose from the most disruptive period of the coronavirus pandemic. The Global EV Outlook 2022 puts China as the leader at that stage, responsible for the sale of around 3.3 million EVs, which is 0.3 million higher than the rest of the world in 2020. At the end of 2021, China’s fleet remained the largest in the world at around 7.8 million vehicles.
Looking further west, Europe sustained an increase in sales at around 65% year-on-year to 2.3 million. This followed the rapid adoption of electric cars in 2020. For the period of 2016 to 2021, European sales increased by a compound annual growth rate (CAGR) of 61%, exceeding China’s, at 58%, as well as that of the US, which reached 32%.
But, according to the International Energy Agency (IEA), the EV industry is one of the most dynamic and while the hype around sustainable transition increases through global media and the increased number of the EVs available on the market, it’s no wonder that growth sped up in the 2020s. The next question is, ‘Will battery manufacturers keep up?’
“Few areas of the new global energy economy are as dynamic as electric vehicles,” says Faith Birol, IEA Executive Director. “The success of the sector in setting new sales records is extremely encouraging, but there is no room for complacency.”
The battery supply chain could disrupt EV adoption
The supply chain also contributes to the volatility of the industry. As we have seen, the supply chain is a critical factor in industry success and the IEA report addresses the availability of raw materials for battery production as a key contributing factor to the success of EVs.
“Policy makers, industry executives and investors need to be highly vigilant and resourceful in order to reduce the risks of supply disruptions and ensure sustainable supplies of critical minerals,” says Birol. “Under its new Ministerial mandate, the IEA is working with governments around the world on how to strategically manage resources of critical minerals that are needed for electric vehicles and other key clean energy technologies.”
Due to many global disruptions, including the Russia-Ukraine war, prices of resources such as cobalt, lithium and nickel have increased with prices of lithium increasing seven-fold from the beginning of 2021 to May 2022. Not only is this why prices of EVs are high, but the supply of raw materials acts as a constraint for further increase in EV adoption.
